NorthWestern Energy lost its request to put solar net-metering and other on-site generation customers in a new rate class, but it avoided greater scrutiny of Colstrip-related costs, during a Nov. 26 work session covering a laundry list of issues in the utility's general rate case.
In general, the Montana PSC largely sided with NWE's requests during the session.
The commission unanimously voted in late October to approve a $6.5 million additional revenue requirement (CU No. 1929 ). The PSC plans to issue an omnibus final order covering all the docket's issues in late December.
While commissioners followed PSC staff's recommendation to not require additional reporting on NWE's 30 percent stake in Colstrip Unit 4, they explicitly noted questions about future remediation costs and money for community transition, among other issues. Additionally, the commission voted on establishing a fixed-cost recovery mechanism, hazard tree removal work and after-hours reconnection fees, among other issues in NorthWestern's general rate case [D2018.2.12].
Solar advocates cheered the PSC's unanimous no vote on a net-metering class. The issue came out of House Bill 219, passed in the 2017 legislative session, requiring NorthWestern to study the effects of net metering and include the results in its rate case filing. The bill also directed the PSC to consider creating a new customer class based on the results.
Commissioners found the study, completed by Navigant, lacked enough information to decide. Further, PSC staff and commissioners said NWE fell short of proving its case for a new class, a lower rate for customers' excess power and new demand charges.
"I can't honestly see in the record anything that NorthWestern has provided that can reliably support us voting for any of their proposals," Commissioner Roger Koopman said during the session.
Furthermore, "their methodology is in direct defiance of very explicit instructions by this commission in terms of minimum requirements of information," he said.
NorthWestern Energy ignored methodologies explicitly picked by the PSC for calculating avoided costs for energy, capacity, and transmission and distribution. It did not communicate the changes to the commission, which learned of them only when the company filed its rate case. NWE told the PSC its approaches are more accurate, but it provided no evidence to support the claims, PSC staff said in a Nov. 22 memo to commissioners.
Currently, NWE pays net-metering customers a little more than 11 cents/kWh for excess generation exported to the utility. That rate "far exceeds any price that NorthWestern has paid for energy in recent years," PSC staff member Bob Decker said during the work session.
If the commission voted to form a new class, staff recommended setting an export rate of 6.3 cents/kWh.
Commissioners, though, agreed with staff's recommendation to reject NWE's request in full. They also unanimously voted to consider a new customer class when net-metering customers account for 5 percent of the utility's peak load or NWE provides minimum required information for PSC staff to review. That threshold was suggested by Vote Solar and the Montana Renewable Energy Association. The two groups, which jointly intervened in the docket, estimate rooftop solar is currently 1 percent of NorthWestern's peak load.
The two solar advocacy groups applauded the decision.
"Today, Montana joins other states in recognizing that customers have the right to produce and consume electricity they generate from the free sunlight that shines on their property every day—without discrimination from utilities," Earthjustice staff attorney David Bender, who represented the groups, said in a prepared statement.
During a public hearing the MPSC held prior to the work session, several residents and state lawmakers urged commissioners to reject a new customer class and maintain retail rates for customers' energy exports to NWE.
Key actions on Colstrip requested by intervenors were opening an investigative docket on remediation costs; mandating NWE set aside money for community transition after the plant closes; and requiring additional regular reporting by the utility on Colstrip Unit 4 on topics including retirement projections, cleanup costs and estimates of associated retirement costs.
NWE opposed the requests and continued insisting it plans to operate the Unit 4 into the 2040s. The utility owns a 30 percent stake, representing 233 MW of the unit's' 778 MW nameplate capacity. The other owners in units 3 and 4—Puget Sound Energy, Portland General Electric, Avista and PacifiCorp—plan to exit the plant much earlier than NWE. Avista and PSE will be out in 2025, per Washington state law. PacifiCorp has requested accelerating its depreciation schedule to 2027; PGE's 2019 integrated resource plan shows the units in operation until 2035, but on advice from customer groups, the utility has agreed to study prospects of an earlier retirement.
PSC staff agreed with intervenors that critical questions about Colstrip's future costs need to be addressed. Also, the possibility NorthWestern will be the sole utility left operating Colstrip after 2030 casts serious doubt on its future operation, staff noted in the Nov. 22 memo. "This operational concern supports commission action on a variety of Colstrip-related issues."
Additionally, staff raised the issue that the possibility of Colstrip closing before NWE has depreciated it will leave future customers paying off a resource that does not benefit them.
"NorthWestern Energy plans to operate Colstrip Unit 4 through the end of its useful life," NWE spokeswoman Jo Dee Black reiterated in an email to Clearing Up.
Unlike other utilities invested in the plant, "NorthWestern Energy does not have the access to multiple energy markets," she said.
Also, the utility faces significant projected shortfalls of baseload generation during peak demand, she said.
Despite encouraging commissioners to consider pressing Colstrip-related issues, staff recommended against opening a docket now. Staff noted too many unknowns exist to make the effort worthwhile. These include actual remediation costs, apportionment of liability and retirement dates.
Additionally, the commission already set NWE's revenue requirement in an Oct. 29 vote. That leaves no room to consider changing Colstrip-related costs in the general rate case docket.
Koopman moved to take up the investigation now. But no commissioner seconded the motion.
The PSC voted 4-1 in favor of the staff recommendation, with Koopman dissenting.
Koopman also dissented in the vote on establishing a fixed-cost recovery mechanism. The PSC backed staff's recommendation to approve a pilot period of the mechanism that does not change the utility's return on equity.
The commission also directed NWE to spend at least $2.3 million a year on removing hazard trees threatening the utility's power lines and other grid infrastructure. Pine beetles have been particularly devastating to trees adjacent to the utility's power line rights of way, according to NWE testimony submitted in the rate case.